United India Insurance could be the top choice for privatisation as the government initiates discussions on plans to sell off a general insurance company.
According to sources, the Centre is initiating work on the privatisation of a public sector general insurer.
“United India Insurance is being seen as the first candidate for privatisation in the general insurance sphere. The Centre could go in for an Air India kind of stake sale, “said a person close to the development.
While discussions have already started on the privatisation of a general insurance company, a formal proposal has yet to be formulated.
“Given the financial health of the three PSU general insurance companies, it is essential that the government take steps. A proposal is likely to be finalised in the coming months, “said the source.
The Centre has already completed the initial public offer of Life Insurance Corporation of India and is working on the stake sale in IDBI Bank, the source further noted, adding that the general insurance space will be the next focus area.
In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman announced that, other than IDBI Bank, the Centre proposes to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22.
Of the four State-run general insurance companies, three firms—National Insurance, Oriental Insurance, and United Insurance—are unlisted.
The Centre has been looking at possible strategies for them, including a proposal for a merger, which was later shelved.
The Centre had in April this year enhanced the authorised share capital of the three firms to facilitate a capital infusion of ₹5,000 crore in a bid to help improve their financial health. While National Insurance was to get capital of ₹3,700 crore, Oriental Insurance would receive ₹1,200 crore, United Insurance ₹100 crore as capital.
United India Insurance was incorporated as a company in February 1938. According to IRDAI data, it reported a 16.9 per cent year-on-year increase in gross premium paid, amounting to ₹1,626.77 crore in April 2022.
It reported a net loss of ₹227.52 crore for the third quarter of 2021-22 as against a net loss of ₹621.49 crore in the third quarter of 2020-21.